Dealmaking activity remains muted in both North and South America as investors wait to see how economic and geopolitical uncertainties play out.


Brazil remains resilient but others are catching up.

Consumer and retail M&A activity was muted across South America – in part likely weighted down by uncertainty in North America and high interest rates.

That being said, Brazil demonstrated some resilience with stability in C&R deal volumes year-over-year. Particularly notable were deals conducted by large foreign players (including Nestle's investment in CRM Alimentos and Britvic's acquisition of Globalbev Bebidas) suggesting continued confidence in the region.

A recent survey of dealmakers by KPMG found that four out of five rated their most recent large deal in Latin America as a success on the whole. However, they also note a number of internal capability challenges that may be slowing the pace of dealmaking (including target identification, strategy and integration).

Many analysts believe that, having experienced a sharp drop in M&A activity in 2022, markets are slowly recovering1. Interestingly, the KPMG survey indicates that investors now see Mexico as the most attractive M&A destination in Latin America over the next two years. Given that Mexico saw just a third of the deal volume of Brazil in 2022, that suggests a significant change in appetite. Brazil was ranked second in terms of attractiveness, followed by Costa Rica.

Source: Refinitive, accessed on 16 Jan 2024


High interest rates, stubborn inflation and reduced consumer sentiment are dragging on European deal making activity. Yet there are still a number of significant opportunities for value across the continent.


Deal Volumes slow down

Aligned to other European economies, the backdrop for the consumer sector is challenging. The UK witnessed a 6 percent decline in M&A volumes YoY with 397 deals worth US$ 5.7 billion (a 15 percent decline in values YoY) in 2023. Moreover, the Bank of England forecasts inflation rates to remain above normal at least until 2025. Disposable income has reduced and consumers continue to be cautious with their spending; this is impacting profitability across the sector as volumes remain under pressure; our analysis suggests listed C&R companies experienced a 5 percentage point decline in EBITDA margins through 20232.
Concerns about overall business performance and the quantum and cost of debt available for acquisitions are impacting the deal market and forcing investors to think carefully about the valuation multiples that can be supported by current trends. Private Equity (PE) investment volumes have declined with only around 50 PE investments in 2023, versus more than 70 completed in 2021.

Over the past year, activity has been focused on businesses that continue to demonstrate the ability to show profitable growth, with the majority of activity in the UK being focused in the Beauty and Pet Care sectors, and businesses with a health and wellness proposition. We have also seen selected opportunistic transactions in more challenged sub-sectors (e.g. apparel and retail) where well-funded trade players have been able to acquire attractive brands. Private equity owners have been focused on improving portfolio performance and at helping extend the life of an investment. For example, businesses have refinanced, sold minority stakes and arranged mezzanine debt.

We expect the deal activity in 2024 to remain at a similar level given the challenging environment, with activity continuing to be focused on businesses with profitable growth, or sub-sectors where sellers have adjusted their valuation multiple expectations. We expect bilateral discussions or auction with limited numbers of parties to continue to be a route to successful completions as this is allowing investors to have deeper engagement with target companies to better understand the opportunities and risks.

Source: Refinitive, accessed on 16 Jan 2024

With inflation rates remaining in the 1-3 percent range3and associated financing rates also staying low, Switzerland has enjoyed some insulation from the downturn in M&A activity currently being experienced by its European neighbors.

Deal volumes remained steady through 2023, mostly led by corporate investors. Indeed, less than 10 percent of the deals conducted in Switzerland were PE-led, well below the EU average of 17 percent, reflecting the corporate drive to M&A activity.

Once again, the unique US-Swiss corridor played a key role in the M&A market, driving around 10 percent of the deals in the retail sector in 2023 and highlighting the strong bilateral relationship between the two markets.

KPMG professionals’ view suggests that Switzerland in 2024 will continue to benefit from its stable economic condition, low inflation and favorable interest rates. It should also attract attention for the quality of its assets, reflecting demand for luxury brands and confidence in the market overall.

Source: Refinitive, accessed on 16 Jan 2024

Italy is one of the few markets globally to have bucked the downward trend in M&A activity since the pandemic. In fact, deal activity in Italy rose by 8 percent year-over-year in terms of deal volume, surpassing 241 deals in 2023 (versus 208 in 2021 that was an extra ordinary year for deals). And average valuations have risen from 9.65x to 10.58x through 20234.

Italy’s M&A activity was largely driven by deals in the retail sector, with apparel deals contributing around 22 percent of the total deal volume. One of the bigger deals, for example, saw French luxury group Kering SA acquire 30% stake in Valentino (an Italian fashion house) for around EUR1.7 billion (US$1.84 billion).

The outlook for Italy remains strong with analysts forecasting inflation rates to fall dramatically to 2.7 percent from the current highs of 6.1 percent. That should give investors’ confidence in the market and some much-needed breathing space within which to conduct deals.

Source: Refinitive, accessed on 16 Jan 2024

Persistent inflation, a contraction in customer purchasing power (despite all-time high savings rates) and general macroeconomic uncertainty are adding pressure to margins and growth rates. At the same time, high financing costs are forcing the buy/sell gap wider. Many investors are therefore cautious about future growth outlooks and valuations.

This has placed downward pressure on M&A activity in the consumer and retail sectors. Indeed, following a strong 2021 and 2022, market conditions for M&A in France have become more challenging over the past year with deal volume falling around 29 percent year-over-year. Big deals (over EUR200 million) have virtually disappeared.

What will convince private equity investors (who are sitting on some US$2.5 trillion of dry powder globally) and strategic investors to open their wallets? In this environment, it will likely be small-to-mid market cash generative companies with established business models and visibility on future revenue that will capture interest from M&A buyers. Those not fitting that bill will likely find the environment more challenging.

Source: Refinitive, accessed on 16 Jan 2024

In many ways, Spain has been remarkably resilient – significantly lower than in 2022 (Spanish Office for National Statistics estimates December 2023 inflation closed at 3.1 percent) and household consumption is on the rise (albeit still below 2022 levels thanks to higher interest rates).

However, growth is expected to fall to just 1.5 percent in 2024, according to the KPMG Global Economic Outlook, compared to 2.4 percent in 2023 recently announced by the Minister of Economy. And, as a result, investors remain somewhat wary of entering the market until they are sure inflation and consumption rates have stabilized.

This has placed continued downward pressure on valuations in Spain’s consumer and retail sector. Valuations had already contracted by 20 to 30 percent in the sector since 2020. And they are lower today than they were a year ago, suggesting the trend is not turning around rapidly.

Given the current environment, companies in the fashion, restaurants and leisure categories are expected to underperform as consumers trade down to private labels lower-cost alternatives. Branded consumer goods without a notable price or characteristic differentiator may struggle.

Low-cost staples, on the other hand, may perform well, as will products or services related to health, well-being and self-care (such as skincare and healthy food supplements, for example). Mid-market players who are less exposed to the current capital market uncertainties are also expected to capture some investor attention.

Source: Refinitive, accessed on 16 Jan 2024

Much like the rest of Europe, Germany is also dealing with inflation and economic weakness which, in turn, is undercutting consumer sentiment and dampening demand. Yet, even so, Germany's M&A market has stayed open, delivering a slight increase in volume over 2022. And valuations have stabilized over the past year, suggesting improved alignment between buyer and seller expectations.

Within the German C&R space more broadly, we are seeing an increased urgency around innovation and technology adoption in an effort to get closer to the consumer. As a result, there has been increased appetite for companies that are adapting to technological changes and sustainability demands, as well as retailers using technology to enhance customer experiences and supply chain operations. Brands successfully executing digital transformations and those with direct-to-consumer models are also getting attention.

There are, however, some risks to manage in the future. Evolving regulation and policies – including antitrust and foreign direct investment considerations – could significantly influence dealmaking in the future. Increased ESG scrutiny will likely create challenges, but it could also boost dealmaking. Competition amongst geographic hotspots for M&A could also present longer-term risks.

Looking ahead, KPMG professionals expect to see increased M&A activity within the retail and leisure subsectors as organizations work to restructure their finances and their operating models. Companies that are undervalued or offer strong turnaround opportunities will also likely see increased attention.

Source: Refinitive, accessed on 16 Jan 2024

Deal volumes remain relatively stable in the Netherlands with -82 deals in 2023, compared to 131 in 2021 and 83 deals in 2022. Significant price inflation continues to impact revenues with consumer price indexes rising 3.6 percent in the first half of the year.

Activity may remain restrained for the time being. Domestic companies are likely to focus on store rationalization and stabilizing the business as raw material prices and supply chains start to return to normal. Some expansion decisions may also be shelved due to continued socioeconomic and geopolitical uncertainty.

That being said, expect to see continued action – particularly related to consolidation. The food industry has been particularly active in this regard, with smaller food retailers selling to larger ones in order to capitalize on scale of investment and purchasing power (such as Royal Unibrew’s acquisition of Vrumona for EUR300 million, for example). KPMG professionals also expect to see large Dutch companies continue to seek out opportunities for vertical integration in overseas markets.

Source: Refinitive, accessed on 16 Jan 2024


Market risks continue to hold back foreign deal making in Africa while currency challenges are slowing internal M&A activity.


Strong demographics and room to grow

Sub-Saharan Africa is a massive and diverse region with 46 countries, and 1.1 billion people who speak 1,500 different languages. It is therefore difficult to make generalizations about the region.

What is clear is that Sub-Saharan Africa boasts strong demographics and significant room for economic development, making the region appealing for those investors with medium-to-long term outlooks.

At the same time, however, expensive market-based funding options and declining aid budgets have led to a rise in the interest burden on public debt. With more than half of Sub-Saharan markets currently experiencing double-digit inflation, growth has moderated as household purchasing power declines.

Two major markets stand out for dealmaking activity – Nigeria and South Africa. South Africa’s dealmaking activity has remained relatively resilient despite high inflation and energy supply challenges. With 33 deals already on the books for 2023, it seems South Africa will see a marginal increase in deal activity this year.

Nigeria’s outlook is somewhat more complicated. In June 2023, Nigeria floated the local currency (Naira) which sparked a rapid devaluation against foreign currencies. Some global companies (including GSK, Sanofi and P&G) exit the Nigerian, with plans to implement a third-party model for the distribution of their products in the country.

With an anticipated end to US rate hikes, the region is optimistic that deal value and volumes will return as local currencies regain some strength.

Source: Refinitive, accessed on 16 Jan 2024

Asia Pacific

Foreign and regional cross-border deals continue to drive dealmaking as companies seek to diversify their offerings and scale up their footprints.


A refocus on earnings expectations slowed deal making in 2023, with a strong turnaround expected in 2024

While the pace of dealmaking slowed somewhat in 2023 as compared to 2022, volume remains well above India’s pre-pandemic average. Around 314 deals were conducted in 2023. There are assuring signs that deal activity will pick up pace in 2024, with strong investor sentiment as reflected by all-time high capital markets.

Last year’s data suggest that around half of India’s listed companies missed their earnings forecasts in 2023. As a result of which most corporates focused on managing their revenue targets and profitability rather than pursuing inorganic growth. This was exacerbated by slowdown in VC investment in early stage companies.

PE firms, however, continued to evaluate deals in the mid to large market segments and are expected to double down on investments in India given their fund allocation for the sector and overall optimism on the India growth story on the back of continued economic reforms and favourable Geo-Political environment.

Food services, restaurants and casual dining saw significant dealmaking in 2023 (up 22 percent year-over-year) and this pace should extend into 2024. There has also been a significant focus on corporate capacity building, leading to an uptick in dealmaking across multiple sectors. Over the coming months, see increased activity in the beauty, personal care and packaged food sectors is expected.

There may be some activity around technology companies as large retail companies move to incorporate new technologies and models into their existing operations in an effort to reduce costs and improve scale.

Source: Refinitive, accessed on 16 Jan 2024

India: The deal value in 2018 includes US$16 billion Walmart’s Flipkart transaction.

Exposure to consumer spend creates challenges

Concerns about consumer confidence and the outlook for consumer discretionary spend impacted C&R deal activity in Australia in 2023. Whilst the bid-ask spread is closing, there remains a valuation expectation gap between buyers and sellers, which coupled with a more risk averse investor approach and higher bar for due diligence have all impacted the ability to complete deals, relative to 18-24 months ago.

We are seeing a growing valuation gap between high-quality businesses and the wider pack of C&R players who are more significantly impacted by reduced discretionary consumer spend. Those without a global footprint and the associated brand position are finding it difficult to complete deals in the current economic climate. Domestic retail deals have been particularly challenging with demand and valuations for local health and beauty brands noticeably reduced.

The M&A market saw a clear pivot towards more defensive businesses, with successful C&R deal activity largely focused on high quality businesses and market-leading brands with less exposure to discretionary spending patterns.

This is reflected in significant deal activity from foreign investors seeking to snap up Australian brands that have global reach. Zimmermann, a luxury fashion brand, was acquired by Advent International, a US PE firm; Aesop, a luxury cosmetics brand, was bought by L’Oreal; Bondi Sands, a skincare and cosmetics brand, was bought by Kao Corporation, a Japanese cosmetics company. Around 75 percent of the C&R deals in 2023 were cross-border.

PE deals in the sector are down 35 percent year-over-year. Transformative corporate M&A deals have also been limited as boards and investors become more risk-averse and access to capital becomes more challenging.

Source: Refinitive, accessed on 16 Jan 2024

A weaker Yen creates challenges and opportunities

Lower valuations are weighing on dealmaking activity. In 2023, M&A value stayed low owing to lower valuation of M&A targets in US, Euro and Asian markets which slowed down Japanese companies’ outbound investments due to less number of sellers. Additionally, in October 2023, the Yen hit a 32-year low against the US dollar which, in turn, had a negative impact on M&A activity as corporates worked to shore up their financial statements. Deal sizes shrank as the number of large deals (valued at more than US$100 million) tumbled by more than 2 percent.

A weak Yen is both a challenge and an opportunity. Cross-border deal volume is expected to remain stable through 2024 as a depreciated Yen makes Japanese companies more attractive to large international players. Private equity-backed deals saw a small but steady increase (3 percent) year-over-year which is also expected to carry over into 2024. Interestingly, the market also saw 14 outbound deals where buyers from Japan acquired assets in other Asian markets.

Resource scarcity continues to pose significant structural challenges to Japan’s economy as a lack of resources – human resources in particular – start to impact the production cost of goods which, in turn, could negatively impact M&A activity going forward.

A recent trend towards building larger and more diversified businesses seems set to continue. Many players are diversifying into adjacent markets. For example, there were nine deals in 2023 that saw drug stores acquiring grocery supermarkets with the aim to expand their product range into food and groceries. We are also seeing players start to make alliances with smaller companies that can help them start new digital businesses.

Source: Refinitive, accessed on 16 Jan 2024

Dealmaking remains resilient

While China’s deal count increased 12% year-over-year (with around 358 deals in 2023), value is only around half of what it was in 2021. The absence of large deals across globe impacted the country M&A ground as well, influencing investor sentiments.

There is expected to be a soft recovery of inbound activity in 2024 following a challenging 2023 that was impacted by macroeconomic and geopolitical headwinds. However, the sectors such as home improvement, apparel and accessories that stayed active with 15% and 13% YoY growth in volume, respectively, in 2023 will continue to stay of interest for investors. Especially, sportswear or athleisure has seen immense growth in the last few years. Another example of the sector’s confidence is Amer Sports backed by Chinese athletic apparel maker ANTA Sports announced a possible IPO on the NYSE in the first week of the new year.

China remains an important market and contribute a considerable share of global revenues for some MNCs. In the coming year, MNCs will continue to revisit their China strategy and look for alternative investment methods such as carve outs, joint ventures (JVs) or asset light structures, among the others.

PE investment has slowed in China due to investment-exit concerns following the announcement of new government regulations that will reduce the number of IPOs and that will prioritize certain sectors.

The consumer and retail M&A market in the country is expected to see steady growth and increased activity in select sectors as players capitalize on growth opportunities.

Source: Refinitive, accessed on 16 Jan 2024

Supply chain diversification and demographic trends provide a boost

Corporate deals dominated the M&A market in South East Asia in 2023, lifting deal volume up by some 33 percent year-over-year. Interestingly, around half of all deals in the region were cross-border, largely from other ASPAC markets including Japan, China and Singapore. Food and beverage manufacturers and retailers saw considerable activity and interest.

This type of activity is expected to continue into 2024 as companies seek to diversify their supply chains away from China. That should provide a boost to many markets. Indonesia, for example, saw consumer and retail deal volume jump 30 percent year-over-year – mostly driven by cross-border deals.

Global operators are also expected to increase their investments into the region. The past year saw rising interest from US and UK investors (particularly in the ingredients segment where five deals were completed in 2023). Boasting favorable market conditions and comparatively easy market entry regulations, we expect overseas players to increase their focus on the region going forward. These investors continue to seek scale and have a positive outlook on demographic demand trends.

Source: Refinitive, accessed on 16 Jan 2024

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